“Most people cheer, but at the same time they shake their heads and leave, when will the bust come?” said Jane Leung, SVB Private Bank’s chief investment officer.
One of those who bought their way into the frenzy was Matthew Schorr, 35, a lawyer in Cherry Hill, New Jersey. He has been looking for hot investments for years, but lost interest in the stock market and gave up Bitcoin after his friends dismissed the cryptocurrency as “fake money”. He now regrets that the value of a single bitcoin has risen above $ 57,000, meaning the eight bitcoin he paid for a domino pizza in 2011 would be worth more than $ 450,000 today.
Herr Schorr didn’t want to miss it again. As of January, he spent $ 5,000 buying 351 videos from NBA Top Shot, a basketball highlight clip trading website, after chatting on social media about it selling for tens of thousands of dollars were. The value of these clips has now risen to $ 67,000, according to Momentranks.com, which is tracking sales.
The clips are a type of investment known as NFTs, or non-fungible tokens, that have made their way into music, arts, and sports. The digital tokens use computer networks to prove that a digital item such as a video, picture or song is authentic and give the item value – at least in the eyes of the person who buys it. Some compare NFTs to digital trading cards. (The authors of the underlying works usually retain the copyright.)
Skeptics consider NFTs to be one of the most questionable assets as an NFT image can be copied and shared endlessly. Still, enough people are convinced of the value of token authentication, which they have reconciled with another market-driving phenomenon, FOMO, or the “fear of missing out”.
“I try to keep my finger on the pulse and not let myself fall back,” said Mr. Schorr, who spends up to five hours a day researching the market and chatting with other collectors on Discord. “This type of return over six weeks is completely unknown in any financial instrument.”
Last month, NBA Top Shot had total sales of $ 232 million since it launched last year – including sales of $ 47.5 million in a single day.